Regulation
Circle’s USDC emerges as the main beneficiary of the EU’s push towards compliant stablecoins
The MiCA regulation has created a growing demand for compliant stablecoins, with Circle’s USDC proving to be one of the main beneficiaries of this trend.
In fact, according to French blockchain analytics firm Kaiko, USDC is leading the demand for regulated stablecoins.
USDC Demand Increases After MiCA
In his last relationshipKaiko revealed that non-compliant stablecoins currently account for 88% of the total stablecoin volume. But the Regulation on Markets in Cryptocurrencies (MiCA) in Europe, implemented on June 30, is expected to change this dynamic, resulting in market makers favoring compliant stablecoins over non-compliant alternatives.
In recent months, major cryptocurrency exchanges such as Binance, Bitstamp, Kraken, and OKX have already imposed restrictions, delisting non-compliant stablecoins, including Tether’s USDT, for their European customers.
Meanwhile, Kaiko noted that the share of compliant stablecoins has gained significant traction over the past year, indicating growing interest in more transparent and regulated alternatives, a trend that has primarily benefited USDC.
According to Kaiko estimates, USDC has seen a significant increase in weekly trading volume, reaching $23 billion in 2024, up from $9 billion in 2023 and $5 billion in 2022. This growth has pushed USDC’s market share to an all-time high, approaching FDUSD’s 14%.
Interestingly, last week, Circle, the fintech company and the company behind USDC, received an e-money license from the French Autorite de Controle Prudentiel et de Resolution (ACPR), making it compliant with the stablecoin provisions under the MiCA. With this, Circle has become the first global stablecoin issuer to achieve compliance with the new regulatory framework in Europe.
The approval also meant that both USDC and Euro Coin (EURC) tokens are now issued in the EU in full compliance with MiCA.
Centralized Exchanges Fuel USDC Growth
It was also discovered that centralized exchanges, or CEXs, have played a major role in the increase in USDC volumes over the past year.
Following Binance’s decision to re-list USDC in March 2023, the stablecoin’s market share on CEX jumped from an average of 60% to over 90% across all exchanges. Bybit’s introduction of zero-fee USDC trading in February 2023 also contributed to the increase in volumes.
The increase in demand for USDC can be attributed entirely to its increased use in the settlement of perpetual futures contracts. The share of USDC-denominated Bitcoin perpetuals on Binance and Bybit has increased from 0.3% to 3.6% since January. For Ethereum perpetuals, the increase has been even more significant, with ETH-USDC trading volume increasing from 1% to over 6.8% over the same period.